Have you felt strapped for cash lately? With the rising cost of living, many Americans are feeling the pinch and adjusting their spending habits. Most people focus on things like entertainment, vacations, and other forms of discretionary spending when setting monthly budgets. It can certainly help to cut back on unnecessary expenses like these. But what about those recurring payments you make every month without batting an eye?
When creating budgets, many people treat recurring monthly expenses as rigid and non-adjustable. They may think they have no choice but to pay up every month, even if the amount seems unreasonably high. That’s how so many service providers get away with charging too much over time. But if you’re serious about saving money, you should analyze those oft-overlooked recurring expenses and identify which ones could be draining your budget. Here are four monthly costs you’re probably paying too much for.
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Insurance
Most people have several different insurance policies they pay for each month. Home, car, and health insurance are just a few examples of common policies. Many people stick with the same policies and providers year after year. But doing so could cause you to spend more money than you need to for the coverage you’re getting. It’s often much better to perform regular policy price comparisons so you can switch to a more affordable option as needed.
It’s wise to sit down near the end of your policy term each year and determine whether you’re still getting a good deal. Request multiple insurance quotes for policies similar to the one you already have. Don’t make the mistake of comparing policies that are very different from each other.
For example, imagine your current homeowners policy has a water backup rider and you want to get that coverage for a better price. In that case, you’ll want to make sure every home insurance quote you request includes a similar rider. That way, you can compare apples-to-apples policies to guarantee you’re getting the best deal and an accurate comparison of your homeowners insurance cost.
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Electricity
If you fail to pay your home energy bill, your power gets turned off. That can make it seem like you don’t have much control over how much you pay. However, there are still things you can do to lower your monthly electricity costs. Often, it just requires you to pay attention to areas of potential waste and make a couple simple lifestyle changes.
One way to save money on electricity is to unplug items that you’re not actively using. Leaving electronic devices plugged in can lead to wasted energy, even if the devices appear to be turned off. This wasted energy is referred to as “vampire load,” and it could be responsible for as much as 10% of your monthly electricity costs.
Some of the top devices responsible for vampire load include televisions, printers, smart kitchen appliances, and gaming consoles. Besides unplugging devices when not in use, there are other ways to reduce wasted energy and lower your electricity bills. Consider using smart power strips that automatically turn off the power to devices that aren’t in use. You might also benefit from going solar and reaping the long-term energy savings.
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Prescription Medications
In 2022, Americans spent over $600 billion on prescription medications. It’s one of the biggest annual expenses for many individuals and families. Medication isn’t an optional expense for most people. However, that doesn’t mean you can’t find ways to cut costs on your necessary medications each month.
If you have one or more prescription medications you fill each month, you could be spending more money than you need to. Prescriptions can be extremely expensive, especially if you don’t research price-reducing opportunities. When doctors prescribe medications, they don’t always prescribe the cheapest available options. As the patient, it’s in your best interest to advocate for yourself and ask questions.
One of the most obvious ways to reduce prescription costs is by opting for generic drugs instead of name-brand options. Generic drugs essentially do the same thing as their brand-name counterparts. It’s like buying Great Value canned goods at Walmart. The product is usually the same. The only real difference is the cost. Whenever possible, ask your doctor to prescribe generic drugs so you can save money.
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Subscription Services
Many Americans are signed up for multiple monthly subscription services. From movie streaming to grocery ordering and delivery memberships, there are many different services designed to improve everyday convenience. The problem is that many people end up signing up for more subscriptions than they end up using.
To get rid of recurring expenses that could be draining your budget, comb through your credit card and bank statements at least a few times per year. Look for recurring monthly charges for services you never or rarely use. Then, contact the subscription provider and cancel your membership.
Some memberships have contract periods that charge you a fee if you cancel early. However, depending on how many months remain in your contract period, you may still be able to save money by canceling.
Whether you’re living paycheck to paycheck or simply want to be less reckless with your spending, take a look at your monthly expenses. You could be overpaying on recurring expenses without even realizing it. Follow these tips to adjust your spending habits and stop spending more than you need to.
